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Friday, 2 August 2013

"Not just Essex": how Canadian Frost melts in July

Frost Products Ltd v F C Frost Ltd  [2013] EWPCC 34 (Patents County Court, England and Wales) is a decision of Mr Justice Vos from 26 July 2013.  Almost as surprising as frost in summer is the discovery of a fully-fledged Chancery Division judge sitting in a Patents County Court matter. It rather conjures up the image of a grown-up, tightly wedged into the seat of a ride in a fairground attraction. But never mind, it's a fascinating case so let's take a look at it.

The defendant company, based in the south-eastern county of Essex [almost incredibly, this piece of information is relevant], traded in the United Kingdom since 1971, selling drainage products and washroom products (its flagship toilet suite appears on the right). Many of its products had been used in celebrated buildings, most of which were in London, such as the British Library, the Gherkin, the Houses of Parliament and the Millennium Dome, as well as the Bullring in Birmingham.

The claimant company, which had been trading under the name ‘Frost’ since 1929, was a Canadian corporation. It too sold a range of washroom products, through its business centre near Toronto, Canada. In October 2008, the claimant applied to register the word FROST as a Community trade mark (CTM) in respect of various bathroom fittings while, in December 2009 the defendant registered eight UK trade marks for FROST in connection with its own products.

The claimant, relying on its earlier CTM, felt that the defendant's continued use of the F-word was a trade mark infringement, alleged both use of an identical mark for identical goods and, in the event that the goods or marks were not identical, that there was a likelihood of confusion among relevant consumers. The defendant held its ground: it maintained that the claimant’s CTM was invalid and that, in any event, it was not infringing it.

According to the defendant, the claimant's mark was invalid for two main reasons. First, in October 2008, when the claimant applied to register FROST as a CTM, the defendant could have got an injunction to prevent the claimant’s use of the word 'Frost' in relation to the sale of washroom products on the basis of passing off. Secondly, had not the claimant acted in bad faith when it applied for the CTM, knowing full well that the defendant was an established trader in the UK?

Mr Justice Vos held the claimant’s CTM invalid and added that, even if it had been valid, it had not been infringed.  How so?

As to the defendant’s goodwill and associated reputation, on the evidence the defendant had been trading in washroom products since 1971 and built up a good reputation, as was proven by the fact that its products could be found in so many iconic buildings in the UK and beyond. This being so, it was unrealistic to suggest that the defendant's business or reputation was confined either to London or to -- even more improbably -- to Essex. For the purposes of this dispute, the relevant territorial extent of the defendant’s goodwill had to be seen as England and Wales, and therefore as being of more than mere local significance.

Once the "not just Essex" finding was made, the defendant could have prohibited the claimant’s use of the sign 'Frost' in the course of trade in washroom products in the UK by suing it for passing off on the date when the claimant's CTM application was filed. This being so, the registration of the claimant's mark had to be declared invalid.

As for bad faith ("the opposite of good faith" [good faith, naturally, being the opposite of bad faith, notes Merpel, concluding that not all information which is correct is particularly helpful]), generally implied or involved, but was not limited to, actual or constructive fraud. It could be a design to mislead or deceive another, or involve any other sinister motive. Bad faith also included unfair practices that involved a lack of any honest intention.

Evidence of bad faith of a CTM applicant includes the following factors:
(i) whether the applicant knew that a third party was using the sign in a Member State, this being a factor that could be inferred from length of use;  
(ii) the nature of the applicant's intention, when the application was made, including whether the applicant intended to prevent a third party marketing a product, and whether the applicant actually intended to use the Community trade mark itself and  
(iii) the extent to which the third party enjoyed a reputation in its own sign at the date of the application.
On the evidence, the claimant knew about the defendant's washroom product business and previously sought to prevent the defendant from using its 'Frost' trading name. It could not therefore have been unaware of the defendant's business. There could be no doubt that the claimant acted in bad faith in applying for its CTM, knowing of the defendant's business. On this ground too te claimant's mark would be be declared invalid.

Finally, the defendant had clearly been using its own name when trading in washroom products in a small way since 1971, and in a larger way since 1980. It had built up a good reputation with major firms of architects in the United Kingdom. It was hardly surprising that many of those buildings were in London [and not in Essex? wonders Merpel], but that did not mean that the defendant’s reputation was confined to London. The defendant was plainly known by its trading name of “Frost” to many contractors who purchased its goods; that name appeared on its factory, on its brochures and on its website. The defendant’s use of the name “Frost” was therefore an honest use in the course of trade that could not constitute an infringement of the claimant’s CTM.

Says this Kat, from the judgment it looks as though this is an action that should never have been brought.  Judging by the learned judge's comments, a major plank in the claimant's case was the evidence of a witness whose testimony must surely have appeared to someone, at some time, to be unreliable (to put things at their most generous); there was no way that the existing case law or the rest of the evidence could be twisted to accommodate the claimant either. Nor, from what the Kat can see, was there a realistic prospect of a negotiated settlement in the form of a coexistence agreement.  The claimant should have simply come up with a different name with which to trade in the European Union and got on with it.

Frost in Essex here
Essex in Cat here
Best thing about Essex here

1 comment:

Barbara Cookson said...

This is a really useful case on bad faith, but disappointingly, the own name defense comments are clearly obiter.
Worth noting that the Appeal in the POLLO TROPICAL bad faith (not) case was dismissed by order in February C-171/12 here

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